The Taiwanese manufacturing sector saw a substantial improvement in business conditions last month and posted growth for the 13th consecutive month, a survey released by global banking giant HSBC said yesterday.
The manufacturing sector continued to grow at a substantial rate, although the headline indicator — the purchasing managers’ index (PMI) — fell slightly to 60.7 last month, down from March’s reading of 62.7, the survey said.
A reading over 50 on the PMI, which provides a single-figure snap-shot of the health of the sector, signals an improvement in business conditions, while a reading below 50 represents deterioration.
SLIGHT COOLING
“After a strong quarter of growth, the Taiwanese economy appears to have cooled slightly,” Frederic Neumann, co-head of Asian Economic Research at HSBC, said in the report yesterday.
“Still, the pace of expansion remains comfortable and a steady increase in employment, even if at a reduced pace than in the first quarter, should help underpin consumption growth,” he said.
Incoming new business received by manufacturers increased last month, but the rate of new order growth has slowed since March. Nevertheless, the growth in both new export orders and overall new business remained sharp, the report said.
Output growth weakened modestly compared with that of March, reflecting the lower rise in overall new orders. Yet, a further steep increase in the backlog of work indicated that the expansion of production was not sufficient to meet new order obligations, it said.
According to the report, employment in the manufacturing sector increased markedly last month, suggesting a need to increase operating capacity in line with higher order volumes.
HIGHER INFLATION
Input cost inflation also continued to build as higher raw material prices led the considerable rise in costs faced by manufacturers, the report said.
“Input costs continued to rise rapidly, but so far the pass-through to output prices remains relatively limited, alleviating concerns about price stability,” Neumann said.
In related news, HSBC Bank (Taiwan) Ltd (匯豐台灣商銀), the locally incorporated entity of HSBC Group PLC, began operating in Taiwan on Saturday, with its headquarters based in Taipei.
It was the third overseas bank to set up a subsidiary in Taiwan, following Standard Chartered Bank (Taiwan) Ltd (渣打商銀) and Citibank Taiwan Ltd (台灣花旗).
Currently, HSBC Bank (Taiwan) has a network comprising 35 outlets nationwide, with licenses to open another 12 branches. To accelerate growth, the bank is planning to recruit 300 additional employees this year.
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